Question

How does inflation affect nominal interest rates?
a. Plot the three-month U.S. Treasury bill rate (FRED code: TB3MS) from 1960 to the present. What long-run pattern do you observe? What may have caused this pattern?
b. Plot the inflation rate based on the percent change from a year ago of the U.S. consumer price index (FRED code: CPIAUCSL) from 1960 to the present. How does U.S. inflation history reflect your explanation in part (a)?



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  • CreatedOctober 02, 2014
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